The deep strategic error that keeps you poor

Here I’m going to lay out a fundamental strategic mistake that I’ve been making my whole life.  I expect you have too.

It’s a mistake that leads most people into starting businesses, or embarking on careers, where their chances of meaningful success are minimal.  Where their whole lives they will be sweat, struggle, and hustle, without ever catching a tailwind that leads them to exponential growth.

It applies to individuals.
It applies to businesses.
And it’s so simple and obvious, that it’s nearly invisible.

But once noticed, you see it everywhere.  And it might just totally transform the way you go about your work.

I call it the Personal Power Principle.

Let’s get into it.

The basic idea is that most people in their careers try to “act up” to a higher level of work where their “personal power” is low – meaning they have little leverage and so achieve little success.  Very successful people on the other hand do the opposite – they “act down” to a level of work that is in some way “below them”, where they have high power, high leverage, and thus high returns.

To visualise this in a simple way, imagine two scales ranging from 1 to 10:

• The personal scale
• The business scale

In each case 1 represents a “low” level of sophistication and skill, and 10 represents a “high” level.

On the personal scale, a person who measures “1” would, in principle, be a person with low personal power – low knowledge, low skills, low resources, low energy.  Whereas a person who measures “10” would be a person with extraordinary knowledge, skills, resources, and energy.  Elon Musk, for example, is a billionaire with world class expertise in coding, engineering, and business, whilst also having a phenomenal tolerance for risk.  An easy “10”.  A baby (to give a stupid example), would be an easy “0”.

(Please note, I totally realise that true human worth is not measured this way, nor even is true personal power – I’m just giving a crude sketch to help you totally get the theory).

On the business scale, a similar thing applies, but for industries.  A “1” would be an industry which is unsophisticated, uncompetitive, requires no special knowledge, has a low barrier to entry, and is generally unattractive.  Perhaps skip hire, or cleaning public toilets.  A “10” would be the opposite – extreme levels of sophistication, competition, expertise, and attractiveness.  Perhaps investment banking, or making Hollywood movies.

Now when we put these two scales together, we can see that each individual, at each moment of their life, has a rough “level” of personal power, which then corresponds to a rough level of business where they would be able to perform effectively.

If your “power rating” is 5, then you could expect to be reasonably successful in an industry or job with a “difficulty level” of 5.

Got all that?

Right – well the key here is how people tend to direct their skills.

Most of us are aspirational; we want to “climb”, and to be seen as higher status than we really are.  What this means is that we shoot for work which has a higher difficulty level than our personal power.

The result of this is predictable: we spend our lives in situations where we have little leverage, and although our vanity might be soothed, we ultimately fail to make much of a material impact.

Extremely effective and successful people on the other hand tend target work which is a couple of clicks below their personal power.  In other words, they target work where they have massive leverage.

To give you a silly example of this: imagine if Elon Musk decided to pack in all the space stuff, and instead started a skip hire business.  Could we be in any doubt as to whether that would be the most successful skip hire business in the world?  Personally I don’t think so.  It would be a massive over-allocation of power.

You can imagine this dynamic at play within industries too.  For example, think of the broad “marketing agency” world.  At the top of the sophistication / difficulty level you might have pure-play “creative agencies” in the Saatchi & Saatchi mould.  And at the bottom you might have something like an agency that specialises in leafleting.

Almost without exception all agencies in that hierarchy will be trying to push themselves “up” the chain to higher levels of sophistication where they have increasingly little leverage.  Almost none will do the smart thing and push down the chain to a level where their power is maximised.


Why do they make this basic error?  There’s just as much money to be made down the chain as up the chain.  Often more in fact – as they say “where there’s muck, there’s luck”.

Obviously we know the reason.  Vanity and status games.  The forces that really drive us – even if to our material detriment.

Now look, obviously I get that there is more to life than money and leverage.  You might want to push to higher levels of sophistication simply because you’re fascinated by that space.  Because you love it.  And that’s great.  Just don’t expect to be highly effective in a domain where you are essentially a tourist.

True value is created where higher levels of thinking meet lower levels of problems.

Not just for you, but for the world at large.

If you’re a leafleting agency who wants to take on the cream of the world’s creative agencies because you just bloody love it, that’s great.  But remember: it’s only great for you.  It’s for your own amusement.  You are not giving your gifts in the manner which is of most benefit to the world at large.

So my advice is simple:

1. In the learning stage of your career, or building your business, strive upwards.  Take yourself to the highest level of personal power possible.
2. Then, when you feel you’ve hit a good level of competency, look down, and see where you can take the competency to have the biggest effect.
3. And finally, put your vanity aside, and play there.  Become the best damn toilet cleaning business the world has ever seen.

This is how you make an impact.  This is how you give to the world.  And this is how you make truckloads of money.

The only thing standing in the way is your foolish pride.

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